During the American Civil War, Atlanta served as an important railroad and military supply hub. (See also: Atlanta in the Civil War.) In 1864, the city became the target of a major Union invasion (the subject of the 1939 film Gone with the Wind). The area now covered by Atlanta was the scene of several battles, including the Battle of Peachtree Creek, the Battle of Atlanta, and the Battle of Ezra Church. On September 1, 1864, Confederate General John Bell Hood evacuated Atlanta after a four-month siege mounted by Union General William T. Sherman and ordered all public buildings and possible Confederate assets destroyed. The next day, Mayor James Calhoun surrendered the city, and on September 7 Sherman ordered the civilian population to evacuate. He then ordered Atlanta burned to the ground on November 11 in preparation for his punitive march south.
After a plea by Father Thomas O'Reilly of Immaculate Conception Catholic Church, Sherman did not burn the city's churches or hospitals. The remaining war resources were then destroyed in the aftermath, and in Sherman's March to the Sea. The fall of Atlanta was a critical point in the Civil War. Its much publicized fall gave confidence to the Northerners. Together with the Battle of Mobile Bay, the fall of Atlanta led to the re-election of Abraham Lincoln and the eventual surrender of the Confederacy.
The city emerged from the ashes – hence the city's symbol, the phoenix – and was gradually rebuilt, as its population increased rapidly after the war. Atlanta and Fulton County received migrants from surrounding counties, as well as new settlers to the region. According to the US Census and Slave Schedules, from 1860 to 1870 Fulton County more than doubled in population, from 14,427 to 33,336. The effects of African-American migration can be seen by the increase in Fulton County from 20.5% enslaved African Americans in 1860 to 45.7% colored (African-American) residents in 1870.  In a pattern seen across the South after the Civil War, freedmen often moved from plantations to towns or cities for work. They also gathered in their own communities where they could live more freely from white control. Even if they continued to work as farm laborers, freedmen often migrated after the war. Fulton was one of several counties in Georgia where African American population increased significantly in those years.
Atlanta soon became the industrial and commercial center of the South. From 1867 until 1888, U.S. Army soldiers occupied McPherson Barracks (later renamed Fort McPherson) in southwest Atlanta to ensure Reconstruction era reforms. To help the newly freed slaves, the Federal Government set up a Freedmen's Bureau, which helped establish what is now Clark Atlanta University, one of several historically black colleges in Atlanta.
In 1868, Atlanta became the fifth city to serve as the state capital. Henry W. Grady, the editor of the Atlanta Constitution, promoted the city to investors as a city of the "New South," by which he meant a diversification of the economy away from agriculture, and a shift from the "Old South" attitudes of slavery and rebellion. As part of the effort to modernize the South, Grady and many others also supported the creation of the Georgia School of Technology (now the Georgia Institute of Technology), which was founded on the city's northern outskirts in 1885.